Question

Consider an asset that costs $501,600 and is depreciated straight-line to zero over its 9-year tax life. The asset is to be used in a 3-year project; at the end of the project, the asset can be sold for $62,700. |

Required : |

If the relevant tax rate is 35 percent, what is the aftertax
cash flow from the sale of this asset? |

$157,795.00

$165,684.75

$149,905.25

$40,755.00

$1,138,017.00

Answer #1

**Answer is $157,795.00**

Cost of Asset = $501,600

Useful Life = 9 years

Annual Depreciation = Initial Investment / Useful Life

Annual Depreciation = $501,600 / 9

Annual Depreciation = $55,733.333

Depreciation for 3 years = 3 * Annual Depreciation

Depreciation for 3 years = 3 * $55,733.333

Depreciation for 3 years = $167,200

Book Value at the end of 3 years = Cost of Asset - Depreciation
for 3 years

Book Value at the end of 3 years = $501,600 - $167,200

Book Value at the end of 3 years = $334,400

Salvage Value = $62,700

After-tax Salvage Value = Salvage Value - (Salvage Value - Book
Value) * Tax Rate

After-tax Salvage Value = $62,700 - ($62,700 - $334,400) *
0.35

After-tax Salvage Value = $62,700 + $95,095

After-tax Salvage Value = $157,795.00

Consider an asset that costs $193,600 and is depreciated
straight-line to zero over its 9-year tax life. The asset is to be
used in a 5-year project; at the end of the project, the asset can
be sold for $24,200.
Required :
If the relevant tax rate is 34 percent, what is the aftertax
cash flow from the sale of this asset? (Do not round your
intermediate calculations.)

Consider an asset that costs $712,000 and is depreciated
straight-line to zero over its eight-year tax life. The asset is to
be used in a five-year project; at the end of the project, the
asset can be sold for $184,000. If the relevant tax rate is 35
percent, what is the aftertax cash flow from the sale of this
asset? (Do not round intermediate calculations.)
Aftertax salvage value $

Consider an asset that costs $202,400 and is depreciated
straight-line to zero over its 9-year tax life. The asset is to be
used in a 6-year project; at the end of the project, the asset can
be sold for $25,300.
Required :
If the relevant tax rate is 33 percent, what is the aftertax
cash flow from the sale of this asset? (Do not round your
intermediate calculations.)
rev: 09_18_2012
$16,951.00
$234,037.00
$41,175.75
$37,254.25
$39,215.0

Consider an asset that costs $690,000 and is depreciated
straight-line to zero over its eight-year tax life. The asset is to
be used in a five-year project; at the end of the project, the
asset can be sold for $147,000. If the relevant tax rate is 21
percent, what is the aftertax cash flow from the sale of this
asset? (Do not round intermediate calculations.)
Aftertax salvage value?

Consider an asset that costs $220,000 and is depreciated
straight-line to zero over its 5-year tax life. The asset is to be
used in a 3-year project; at the end of the project, the asset can
be sold for $27,500.
Required :
If the relevant tax rate is 32 percent, what is the aftertax
cash flow from the sale of this asset? (Do not round your
intermediate calculations.)

Consider an asset that costs $484,000 and is depreciated
straight-line to zero over its 13-year tax life. The asset is to be
used in a 6-year project; at the end of the project, the asset can
be sold for $60,500.
Required :
If the relevant tax rate is 35 percent, what is the aftertax
cash flow from the sale of this asset? (Do not round your
intermediate calculations.)
rev: 09_18_2012
$130,540.38
$1,267,487.00
$39,325.00
$124,013.36
$137,067.40

Consider an asset that costs $595197 and is depreciated
straight-line to zero over its seven-year tax life. The asset is to
be used in a five-year project; at the end of the project, the
asset can be sold for $152603. If the relevant tax rate is 35
percent, what is the aftertax cash flow from the sale of this
asset?

Consider an asset that costs $705,000 and is depreciated
straight-line to zero over its eight-year tax life. The asset is to
be used in a five-year project; at the end of the project, the
asset can be sold for $153,000. If the relevant tax rate is 24
percent, what is the aftertax cash flow from the sale of this
asset? (Do not round intermediate
calculations.)
After tax salvage value ?

Consider an asset that costs $193,600 and is depreciated
straight-line to zero over its 11-year tax life. The asset is to be
used in a 4-year project; at the end of the project, the asset can
be sold for $24,200. Required : If the relevant tax rate is 34
percent, what is the aftertax cash flow from the sale of this
asset? (Do not round your intermediate calculations.)
$57,860.00
$60,753.00
$15,972.00
$54,967.00
$493,208.00

Consider an
asset that costs $584,000 and is depreciated straight-line to zero
over its eight-year tax life. The asset is to be used in a
five-year project; at the end of the project, the asset can be sold
for $182,000. If the relevant tax rate is 21 percent, what is the
aftertax cash flow from the sale of this asset? (Do not
round intermediate calculations.)
Multiple Choice
$168,852
$219,000
$182,000
$173,970
$189,770

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